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Australian Dollar Gains on Commodities

Despite the risk going into Friday's jobs number, Michalowski had said that he was inclined to be long the dollar, predicting near-term strengthening.

On Thursday, the dollar advanced against the euro even after the Labor Department reported
a faster-than-expected rise U.S. initial jobless claims in the week ended Apr. 30, thanks to the European Central Bank's dovish remarks.

On Thursday, policymakers left the key interest rate unchanged at 1.25%, and during a press conference that followed, European Central Bank president Jean-Claude Trichet spoke less hawkishly than expected -- dampening expectations of a rate hike in June.

"The market was looking for the word "vigilant;" vigilant about inflation -- and Trichet didn't say that at all during his entire press conference or prepared notes, so that suggests that he's more neutral about inflation, more neutral about monetary policy," Michalowski said. "The other thing that he said was that he's concerned about the level of the euro -- in particular in relation to the U.S. dollar. He said that it does play a role in their decision."

"So that also was a clue to the market that the euro at $1.48, $1.49, maybe even at $1.47, is too high for the ECB at this point, and it will have an effect on their economy." Michalowski says the markets had expected the key interest rate in Europe to rise toward 2% by the end of the year, but the expectation has now been slashed to 1.75%.

Trichet's decision came as factory orders and retail sales in Germany, the strong economy in Europe, dropped 4% and 2.1% respectively in March from the month before.

Shares of precious metal producers were rising in tandem with the Australian commodity dollar.
Barrick Gold(ABX - Get Report) was up 1.9% to $47.72,
Newmont Mining(NEM - Get Report) was rising 1.7% to $55.61,
Kinross Gold(KGC - Get Report) was popping 2.6% to $15.16 and
Goldcorp(GG - Get Report) was spiking 2.9% to $50.15.

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